EUR/USD to retrace toward 1.0700/1.0800 on a daily close under 1.0875 – Scotiabank

EUR/USD capped in the low 1.0900 area ahead of the ECB meeting. Economists at Scotiabank analyze the pair’s outlook.

More range trading is likely for the session ahead

More range trading is likely for the session ahead, with the EUR still looking a better sell on minor rallies as Eurozone-US short-term spreads edge a little wider again.

Spot trends look flat on the short-term chart, with the EUR capped in the low 1.0900 area but well-supported near 1.0850 (200-DMA at 1.0848). The technical undertone for the EUR remains soft, however, with the EUR holding last week’s break of bull trend support (now resistance) at 1.0955/1.0960.

More corrective losses in the EUR – to unwind a bit more of the Q4 USD sell-off – look likely in the next few weeks.

A daily close under 1.0875 targets a push back to 1.0700/1.0800.